Libyan Oil Company commits to cut gas flaring

Reuters/Hazem Ahmed

• LNOC chairman speaks to AGBI
• Plans to reduce flaring by 83%
• Libya hosts 9th largest oil reserves

The Libyan National Oil Company is joining the wider global oil and gas industry in committing to near-zero gas flaring by 2030, as part of wider efforts by the state-owned energy producer to reduce greenhouse gas emissions.

LNOC chairman Farhat Bengdara said in an interview with AGBI at the UN Cop28 climate conference in Dubai that the oil producer is embracing sustainable development and diversified energy sources. 

The company aims “to move beyond traditional oil-centric operations, aligning our services with the global shift toward sustainable practice,” Bengdara said.

“We are firmly committed to 83 percent reduction in gas flaring by 2030.”

According to the US Energy Information Administration, Libya vented or flared approximately 180 billion cubic feet in 2019, making it the seventh highest burner globally.

LNOC produces 1.5 billion cubic feet of gas per day and it is aiming to double production within five years. 

In terms of oil, Libya is the 16th-largest producer and second in Africa. With a population of 7 million people, the country hosts the ninth-largest proven reserves in the world. However, years of war and underinvestment have harmed its oil and gas industry.

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Libya is still divided between east and west following a bloody civil war in the wake of the ousting of Muammar Gaddafi, the long-serving dictator who was killed in 2011.

It is now trying to revitalise its oil and gas sector, which represents 90 percent of the country’s revenues. 

LNOC was established in 1970 and produces almost 1.3 million barrels per day (bpd) of oil – divided between 1.25 million bpd of oil and about 50,000 bpd of the lighter condensate.

The company has projects to stabilise and increase its oil production, Bengdara said, targetting output of 2 million bpd in three to five years.

“We are on track,” Bengdara said. To meet the higher oil production target, LNOC will need to invest $17 billion.

The Libyan government has committed to $12 billion; the remaining $5 billion will come mainly from international partners such as Italian Eni, Saipem, French TotalEnergies, and UK-based BP, he added.

LNOC is planning bidding rounds for exploration blocks by the end of 2024.

They will include offshore and onshore blocks for oil and gas. However, Bengdara said it was too early to give exact details.

The commitment to reduce gas flaring involves collaborative efforts from nine oil subsidiaries and strategic partnerships. The company will work with the United Nations Development Program and the National Unity Government, the internationally recognised administration in Tripoli.

“We aim to play an active role in remediating waste, oil and water, forging partnerships with recovery and sustainable energy companies,” Bengdara said.

The recovered gas will be exported, used to produce local electricity or converted to ammonia, he explained.

Questions over fossil fuel phase-out

The company also plans to integrate renewable resources, such as solar, wind and geothermal, into its energy mix to reduce dependence on traditional power sources.

However, when asked about the objective of “phasing out” fossil fuels by 2050 globally, Bengdara was sceptical.

“It is very ambitious,” he said, adding that it must be done rationally and practically.

“Expensive energy will hurt the economy and the majority of people, and you will end up having problems. It must be done gradually.”

Besides the need for investment, LNOC has been facing technical challenges. “We don’t have enough capacity – we need to bring more rigs to increase production,” Bengdara said.

“We invite international companies to come and work, especially in drilling and the rigs.”

Although Libya is a member of Opec, it is exempt from the production cuts under the Opec+ agreement.

Opec+ members decided the additional cuts last week, which will remove 2.2 million bpd in the first quarter of 2024.

Commenting on the Opec+ decision, Bengdara said: “We have to think about the future demand – the interest rates are high, and you expect a recession. The supply needs to be lowered to match the demand,”

“High volatility is bad – oil prices need to remain in a reasonable range.”